Gold retreats from a two-week high as the US dollar strengthens amid renewed concerns over risks in the Strait of Hormuz, though losses appear limited.

Gold buyers have become more cautious as concerns surrounding the Strait of Hormuz boost safe-haven demand for the US dollar. However, expectations that the Federal Reserve is unlikely to resume rate hikes limit the dollar’s upside, helping to underpin gold prices. In addition, the technical outlook remains constructive, suggesting that any pullback could attract fresh buying interest and keep the broader bullish trend intact.

Gold (XAU/USD) came under renewed selling pressure after climbing above the $4,200 level during the Asian session, reaching its highest point in two weeks. The decline appears to interrupt a three-day rally as investors shift toward the US dollar, which is benefiting from safe-haven demand amid ongoing tensions surrounding the Strait of Hormuz. Nevertheless, expectations that the Federal Reserve is unlikely to raise interest rates further continue to limit the dollar’s upside potential. At the same time, sustained purchases by central banks are providing underlying support for the precious metal.

Although the interim agreement between the United States and Iran remains in place, concerns over the Strait of Hormuz continue to linger. Iran has indicated plans to impose new service charges on vessels transiting the strategically important waterway, a proposal opposed by Washington. These developments have kept geopolitical risks elevated, boosting demand for the US dollar and weighing on gold prices at the start of the week.

On the monetary policy front, market participants have scaled back expectations for additional Fed rate hikes following weaker-than-expected US employment data released last Thursday, which pointed to a moderation in labor market strength. Furthermore, lower inflationary pressures resulting from the recent decline in crude oil prices could give the Fed more flexibility to maintain a patient policy stance. As a result, expectations for prolonged restrictive monetary policy have eased, limiting further gains in the US dollar and helping to cushion gold from deeper losses.

Support for gold also continues to come from central bank demand. A recent survey by the World Gold Council showed that central banks increasingly view gold as a safeguard against financial instability, inflation, and geopolitical uncertainty, with nearly 90% of respondents expecting global gold reserves to grow over the coming year. In addition, data from the European Central Bank revealed that gold has surpassed US Treasury holdings in global reserve allocations. China’s central bank further reinforced this trend by adding 320,000 ounces of gold to its reserves in May, marking the nineteenth consecutive month of accumulation.

Looking ahead, investors will closely monitor the release of the US ISM Services PMI and comments from key Federal Open Market Committee officials. These events could influence demand for the US dollar and provide fresh direction for gold prices. However, the broader fundamental backdrop remains supportive of the precious metal, suggesting that any near-term pullbacks are likely to attract buyers and that the overall bullish outlook remains intact.

Gold H4 Chart

Gold remains close to an important technical support zone around $4,150–$4,145, where the 100-period Simple Moving Average (SMA) on the four-hour chart is currently located. The bullish breakout above this moving average on Friday, followed by a move beyond the 23.6% Fibonacci retracement of the April–June decline, provided a strong signal that buyers were regaining control of the market.

Momentum indicators continue to support a constructive outlook. The Relative Strength Index (RSI) remains elevated near 63, while the Moving Average Convergence Divergence (MACD) stays in positive territory, suggesting that the broader upward momentum remains intact despite the recent period of consolidation below the latest highs.

As a result, any decline below the 23.6% Fibonacci retracement level at approximately $4,164 is likely to attract buying interest around the 100-period SMA near $4,147. This area should serve as an important support floor. However, a decisive break beneath this zone could open the door for a deeper correction toward the major support region around $3,940.

On the upside, immediate resistance is located near the 38.2% Fibonacci retracement level at $4,302. A sustained move above this barrier could target the 50% retracement level around $4,415, followed by the 61.8% retracement near $4,527. Beyond that, the 78.6% Fibonacci level at approximately $4,686 marks the next major bullish objective, ahead of a potential retest of the April peak around $4,889.